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CITY OF LINO LAKES, MINNESOTA RECONCILIATION OF THE STATEMENT OF REVENUES,Statement 6 EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31, 2016 Net change in fund balance - total governmental funds (Statement 5) $7,774,754 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense: Depreciation (2,926,157) Capital outlay 3,044,615 Capital outlay not capitalized (1,038,375) Various other transactions involving capital assets increase (decrease) net position on the Statement of Activities, but are not reported in governmental funds because they do not provide (or use) current financial resources: Contributions of infrastructure from private sources 1,824,535 Contributions of fire vehicles and equipment from fire district 221,332 Contributions of infrastructure to business-type activities (1,193,635) Gain (loss) on disposal of capital assets (5,927) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds: Change in delinquent taxes receivable (25,590) Change in delinquent special assessments receivable (14,255) Change in deferred special assessments receivable (1,206,108) The issuance of long-term debt provides current financial resources to governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental report the effects of bond premiums and discounts when the debt is first issued, whereas amounts are deferred and amortized over the life of the debt in the Statement of Activities. Bonds and notes issued (5,758,525) Repayment of principal 2,769,525 Bond premium received during current year (41,497) Amortization of bond premiums and discounts 6,707 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Expenses reported in the Statement of Activities include the effects of the changes in these expense accruals as follows: Change in accrued interest payable 77,032 Change in compensated absences payable (45,510) Change in other post employment benefits (6,295) Pension expense in governmental funds is measured by current year employee contributions. Pension expense in the Statement of Activities is measured by the change in the net pension liability and related deferred inflows and outflows of resources. This is the amount by which pension expense exceeded pension contributions.(1,568,301) Change in net position of governmental activities (Statement 2)$1,888,325 The accompanying notes are an integral part of these financial statements. 40